Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

In a decision issued on April 20, 2007, but published today because of a protective order, the GAO denied a protest by Olympus Building Services, Inc., B-296741.14; B-296741.15 against the award of a contract to Rowe Contracting Services, Inc., issued by the Defense Intelligence Agency (DIA) for janitorial services at the DIA Analysis Center. Olympus challenged the proposal evaluation and best value determination.

Among other things, Olympus asserted that Rowe’s proposal should not have been rated excellent under the technical factors because it did not include a required security awareness plan.  In this regard, in evaluating Rowe’s initial proposal, the Technical Evaluation Board (TEB) noted that Rowe had not provided a security awareness plan; the agency pointed this out to Rowe as a weakness during discussions.  In response, in its final proposal revision (FPR), Rowe provided a security awareness plan comprised of a short statement explaining, among other things, that Rowe was familiar with current Defense Security Services and DIA Regulations and security manuals, and stating that Rowe would comply with all DIA security policies. The FPR also included copies of several documents, including an Annual Security Awareness Briefing, a Refresher Security Briefing, and a Security Awareness Bulletin (self inspection handbook for contractors). The TEB determined that this information was sufficient to respond to its original concern.  Olympus argued that the information should not have been deemed sufficient because it did not include a narrative explaining how each of the included documents would be utilized during performance.

The GAO concluded that the RFP did not require that the security awareness plan be presented in any particular format or include any particular information; thus, the fact that the plan could have included additional information did not require the agency to find it deficient.  “The plan Rowe presented included information addressing security awareness and, given the absence from the RFP of detailed informational requirements, we think the agency reasonably could determine that this information was sufficient to address its concerns. Olympus’s disagreement with the agency’s conclusion is not sufficient to establish that the evaluation is unreasonable.”

While the outcome of the protest might have been the same for other reasons, we find it to be somewhat inconsistent, based on prior GAO decisions, for the GAO to take the position that instead of providing a security awareness plan, it was sufficient for Rowe to simply furnish a “short statement” explaining that it was familiar with DIA security policies.  A “plan” is usually required to enable a TEB to be certain that an offeror has thought out the implementation of agency policy.  The GAO has frequently found that the mere recitation of compliance with an RFP requirement is not sufficient to demonstrate compliance.  The fact that the TEB was willing to accept a “short statement” instead of a security awareness plan should not have endorsed by the GAO.

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In a decision issued by the Government Accountability Office, S4, Inc., B-299817, August 23, 2007, the disappointed offer protested an award to Croop-LaFrance, Inc., a lower priced offeror, under a Request for Proposals (“RFP”) to procure information technology desktop information services. The RFP specified that award would be based on a “technically acceptable-risk/past performance/price tradeoff,” which the RFP explained as follows:

For those Offerors who are determined to be technically acceptable, tradeoffs will be made between proposal risk, past performance and price. Proposal risk and past performance are of equal importance, and when combined, are considered significantly more important than price.

The agency determined that the ratings of past performance of S4, Inc. and Croop-LaFrance were essentially equal and that it was therefore appropriate that price should be the discriminator in making the source selection.  S4 contended that the agency should have drawn more detailed distinctions in the past performance evaluations and that the agency improperly ignored significant distinctions. This sort of protest is very difficult to win because it calls upon the GAO to substitute its discretion for that of the agency – something that the GAO has consistently refused to do, except where there is no rational basis or the agency’s source selection, or procurements laws or regulations have been clearly violated.

Predictably, the GAO stated that “Determining the relative merits of an offeror’s past performance information is primarily a matter within the contracting agency’s discretion; we will examine an agency’s evaluation only to ensure that it was reasonable and consistent with the solicitation’s evaluation criteria and procurement statutes and regulations.” Here, the RFP did not commit the Air Force to evaluating past performance only in the more selective manner that S4 desires.  Rather, based on the GAO’s review of the record, the finding was made that the Air Force’s approach was consistent with the RFP, and that the overall rating of Croop-LaFrance as “high confidence” under the past performance factor was reasonable.

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As Federal government contractors know all too well, Federal procurement has entered the electronic age in a big way.  Not only are solicitations advertised solely through the internet at http://www.fedbizopps.gov, prospective contractors must be registered with another website, FedTeDS, www.fedteds.gov, in order to access plans, specifications and amendments electronically.  Prospective contractors must also be registered with the Central Contractor Registration site, www.ccr.gov, to be eligible to access FedTeDS. The Federal Acquisition Regulation, at FAR 4.1201, now provides that "Prospective contractors shall complete electronic annual representations and certifications at http://orca.bpn.gov. Instead of submitting executed Representations and Certifications with bids and proposals, prospective contractors can choose to rely on their electronic versions, FAR 52.204-8, in order to comply with the requirements of any particular solicitation.  However, what is the effect on a bidder or offeror's status if the information in the electronic file is wrong, missing, or incomplete? Is the bidder/offeror considered nonresponsive and is its bid/offer rejected?

In a recent decision of the Government Accountability Office, S4, Inc., B-299817, August 23, 2007, the Comptroller General found that the awardee’s failure to list NAICS code 541513 in its ORCA certifications did not render the proposal nonresponsive.  The GAO concluded that additional information was also available to the Contracting Officer and found that additional information made it reasonable for the Contracting Officer to conclude that the offeror met the small business size standard for the solicitation.  This is consistent with other GAO decisions that have repeatedly held that “the failure to include with a bid completed standard representations and certifications does not render the bid nonresponsive because it does not affect the bidder’s material obligations.  Such a failure therefore may be waived as a minor bidding irregularity and the information may be furnished after bid opening.

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The Equal Access to Justice Act (“EAJA”) allows the recovery of attorney’s and expert witness fees provided that the applicant submits a timely application “which shows that the party is a prevailing party and is eligible to receive an award under this section. . . .”  The applicant “shall also allege that the position of the agency was not substantially justified.”  5 U.S.C. 504(a)(2).

In a recently decided case by the Armed Services Board of Contract Appeals, Environmental Safety Consultants, Inc., ASBCA Nos. 47498 and 53485, the United States Naval Facilities Engineering Command (NAVFAC) awarded Environmental Safety Consultants a contract in the not to exceed amount of $299,125 for sludge removal, disposal and cleaning services in lagoon #1 and lagoon #2 at the Naval Air Development Center, Warminster, Pennsylvania.  Environmental Safety Consultants applied for EAJA fees and other expenses in the amount of $119,067. The Board had earlier held that the appellant was entitled to an equitable adjustment for certain additional costs, in the amount of $93,989, incurred in performance of the contract.  In other words, the Appellant was a “prevailing party.”  However, as this decision demonstrates, just because a government contractor is a prevailing party does not necessarily mean that the company is entitled to recover EAJA fees.

In considering the EAJA application, the Board turned to the question of whether the position of the government was substantially justified.  EAJA provides in relevant part:

An agency that conducts an adversary adjudication shall award . . . fees and other expenses . . . unless the adjudicative officer of the agency finds that the position of the agency was substantially justified . . . . Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative records, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought. 5 U.S.C. 504(a)(1).

The Supreme Court has ruled that “a position can be justified even though it is not correct, and we believe it can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.”   The Board found that the final decision represented a good faith effort to analyze the issues as they were known to the government at the time, not an unjustifiable agency action forcing litigation. Accordingly, the EAJA application was denied.

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As recently reported by Elise Castelli in the Federal Times, "The long slog to rebuild the Gulf Coast devastated by Hurricane Katrina might be gaining some speed."  A new order signed by GSA Administrator Lurita Doan will make it simpler and faster for the U.S. General Services Administration to award millions of dollars in recovery contracts to local small business in the Gulf Region supporting Hurricane Katrina recovery efforts.  Contracts for debris clearance, supply distribution, reconstruction and other disaster relief will be set aside for local businesses under the order.  "The order gives blanket justification for the set-aside awards, which will limit competition to local firms."

 "Local small businesses are the backbone of every community," said Administrator Doan. "Revitalizing the small businesses is one of the most significant ways we can aid in the recovery of the Gulf Coast region."

    Over the past year, Administrator Doan has met with GSA contracting officers, small business owners, and local officials in the region. Each group has asked for help in streamlining the process to get recovery work awarded to local firms. The new GSA Order, ADM 2851.5, does just that, promoting maximum participation of local small business in the impacted area for acquisitions supporting Hurricane Katrina recovery efforts.

    Additionally, GSA has taken a number of other steps to help small businesses along the Gulf Coast, including the following:

    -- Conducted over 9 small business partnering events to connect  local businesses with subcontracting opportunities.

    -- Awarded over $29 million to local businesses for renovation  of the U.S. Customs House in New Orleans.

    -- Planned a series of monthly meetings throughout the region to enroll local small businesses in the HubZone and GSA Schedules program.

After Hurricane Katrina, the President declared the Gulf Coast a Major Disaster area under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This allows GSA's contracting officers to give a preference to local firms in the affected area. Instead of writing separate justifications, GSA Order ADM 2851.5 provides a blanket justification for all local preference awards under the authority of the Stafford Act.  The Order will remain in effect until the Presidential declaration of a Major Disaster is lifted.

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Under the federal Competition in Contracting Act, an automatic stay of a federal procurement goes into effect if an unsuccessful bidder files a bid protest with the GAO either within ten days after a contract award is made or within five days of an agency debriefing to the bidder, whichever is later.  During the stay, “the contracting officer may not authorize performance of the contract to begin while the protest is pending.”  Nonetheless, the agency may override the automatic stay under certain conditions:

The head of the procuring activity may authorize the performance of the contract (notwithstanding a protest of which the Federal agency has notice under this section) –

(i) upon a written finding that –

(I) performance of the contract is in the best interests of the United States; or

(II) urgent and compelling circumstancesthat significantly affect interests of the United States will not permit waiting for the decision of the Comptroller General concerning the protest; and (ii) after the Comptroller General is notified of that finding. 31 U.S.C. § 3553(d)(3)(C).

Proesters offen fear that an agency will seek to override the automatic stay because of national security or other exigent circumstances, but an override rarely occurs because of the need to obtain higher authority approval.  (The Army Acuisition Corps actually published a manual in 2004 entitled the "The Competition in Contracting Act Automatic Stay Override Guide.")  Recently, in a case decided by the United States Court of Federal Claims, Superior Helicopter LLC and Ranier Heli-Lift, Inc. v. United States, three unsuccessful bidders protested a solicitation issued by the Forest Service (the “Service”), a component of the United States Department of Agriculture, for exclusive-use contracts for helicopter services to support firefighting efforts.  The three unsuccessful bidders for awards – Superior Helicopter LLC (“Superior”), Ranier Heli-Lift, Inc. (“Ranier”), and Erickson Air-Crane, Inc. (“Erickson”) – filed bid protests with the Government Accountability Office (“GAO”), triggering an automatic stay under the Competition in Contracting Act, 31 U.S.C. §§ 3551-56, of the contracts awarded in the procurement.  After the Forest Service acted on July 9, 2007 under 31 U.S.C. § 3553(d)(3)(C) to override the stay based on findings of exigent circumstances and the best interests of the government, the three helicopter operators filed suit in the United States Court of Federal Claims on July 11, 2007, seeking a temporary restraining order, a declaratory judgment, and preliminary and permanent injunctive relief from the Forest Service’s decision to override the stay.

The Court found that the Forest Service’s assertion that exclusive-use contracts were needed to face the significant risks posed by the 2007 fire season was misleading. No one doubted that the risks of fire this season were significant, but exclusive-use contracts would not have added more resources to combat that risk. The Forest Service’s overarching justification as to why the override was in the “best interests” of the United States and based on “urgent and compelling circumstances” was that the exclusive-use contracts were better than the CWN contracts at guaranteeing helicopter availability.  But, the Service provided no data showing that more resources would be made available than were otherwise at the Federal Service’s disposal under the pre-existing exclusive-use contracts and the CWN contracts upon which the Forest Service had previously relied in the immediately prior firefighting seasons.

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A new federal rule allows federal contractors to count subcontracts given to companies owned by American Indian tribes and Alaskan communities toward small business contracting goals. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to implement section 702 of the Emergency Supplemental Act, 2002, as amended by section 3003 of the 2002 Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks on the United States.

The law permits subcontracts awarded to Alaska Native Corporations (ANCs) and Indian tribes to be counted towards a contractor's goal for subcontracting with small business (SB) and small disadvantaged business (SDB) concerns. In addition, the law provides that subcontracts awarded to Indian tribes that are recognized by the Bureau of Indian Affairs in accordance with 25 U.S.C. 1452(c), and Indian-owned economic enterprises that meet the requirements of 25 U.S.C. 1452(e), may be counted towards the satisfaction of a contractor’s goal for subcontracting with SB and SDB concerns. Such credit is taken even where the ANC or Indian tribe may be ‘‘other than small’’ under the Small Business Administration (SBA) regulations.

Small-business advocates are concerned about the new rule and feel that it may be unfair.  Skeptics believe the agencies will funnel more contracts to native companies in an effort to take advantage of the benefits and convenience of working with larger contractors while getting credit toward their small-business contracting goals.

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The Government Accountability Office (“GAO”) posted five protest decisions today and, not surprisingly, each protest was denied. One of those decisions, Metson Marine Services, Inc., B-299705, involved Metson’s protest of the award of a contract to Seaward Services, Inc. under a Request for Proposals (RFP) issued by the Department of the Navy, Military Sealift Command (MSC) to obtain port operation and vessel management services for the Athena high speed research vessel system.  Metson protested that the agency unreasonably concluded that its proposal was technically unacceptable, failed to conduct meaningful discussions with Metson, and conducted an unreasonable evaluation of Seaward’s past performance.

The GAO decided that the agency reasonably determined that the protester’s proposal was technically unacceptable and that it would not conduct further discussions with the protester, where protester’s final revised proposal, submitted after extensive discussions, failed to meet the solicitation’s requirements for a key personnel position. Metson had argued that the agency failed to conduct meaningful discussions.  More specifically, Metson maintained that when Metson’s proposed person was found to not meet the RFP requirements for this key personnel position, the agency was obligated to follow up with further discussions.  Had it done so, the protester asserted, the agency “would have realized that Metson’s proposed person was not only qualified, but exceeded the qualifications of the person Seaward had proposed for the same position.

This decision is not noteworthy because of any groundbreaking legal pronouncements; it simply highlights how difficult it is to overcome the deference that the GAO affords to government agencies.  While acknowledging that “when an agency engages in discussions with an offeror, the discussions must be meaningful,” the GAO nevertheless concluded that an offeror’s creation of a proposal defect which first appears in a proposal revision following discussions does not trigger an obligation to engage in another round of discussions and proposal revisions to advise the offeror of the newly-created deficiency and permit attempted correction. We find ourselves wondering why not?  Isn’t it the purpose of a negotiated procurement to use discussions to correct deficiencies and facilitate the selection of the best value?

In similar deference to agency discretion, the GAO dismissed the protester’s assertion that it was unreasonable for the agency to conclude that its key person failed to meet the solicitation qualification requirements for the position. Metson argued that this individual’s qualifications not only met, but exceeded, the solicitation requirements.  In response the GAO stated that “In reviewing a protest of an agency’s proposal evaluation, it is not our role to reevaluate proposals. Rather, we will consider only whether the evaluation was reasonable and consistent with the terms of the solicitation and applicable procurement statutes and regulations.”

While the agency and the GAO may have ultimately ruled correctly under the particular facts of this case, the GAO’s reluctance to look behind an agency’s decision not to continue or reopen discussions, or not to look behind an agency’s proposal evaluation, means that it is virtually impossible to win a protest where the reasonable exercise of agency discretion is at issue.  In our opinion, the GAO would foster a much more even-handed application of the negotiated procurement source selection procedures if it did not defer so easily to agency discretion.

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